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Insights Tag:API

5G Rollouts in Emerging Economies Aid Q2 Numbers of Ericsson, Nokia

  • Ericsson and Nokia’s Q2 2023 results are in line with their revised expectations.
  • The telecom gear manufacturers are convinced that a few short-term hurdles can be managed to drive growth.
  • The mobile network segment, the largest contributor to both firms’ revenues, witnessed some slowdown in Q2 2023 due to decreased demand from capex-saturated regions.

Nordic telecom giants Ericsson and Nokia announced their Q2 2023 results last week, which were in line with their revised expectations despite lower revenues. The overall market condition remains challenging due to macro uncertainty, but the telecom gear manufacturers are convinced that a few short-term hurdles can be managed to drive growth both in the short term and long term.

Fast5G电在新兴国家,如印度嗨ghlights for both the vendors as revenue growth in these regions was able to offset the sales decline in North America and North-East Asia where operators slowed down their network expenditures after several quarters of high investment.

Swedish giant Ericsson generated net sales of $5.9 billion for the quarter, reporting a 9% YoY decline in organic sales. Ericsson’s Finnish counterpart Nokia generated $6.2 billion in revenue for the quarter, which was flat YoY on a constant currency basis.

Ericsson revenues by region, Q2 2023 vs Q2 2022 - 5G rollouts Nokia revenues by region, Q2 2023 vs Q2 2022 - 5G rollouts

Mobile network segment

This segment is based on the core competence of these organizations and is also the largest contributor to both firms’ revenues. It witnessed some slowdown for the two companies in Q2 2023 on the back of decreased demand from capex-saturated regions. Operators in these regions continue to be selective in spending and are depleting their inventories that have been running high after the 2021-2022 boom.

  • Revenue from Ericsson’s Networks division stood at $3.9 billion. It doubled for emerging markets like India and Southeast Asia but plummeted for regions like North America. India is now Ericsson’s second-biggest market. During the quarter, the company also marked the shipping of 10 million 5G-ready radios.
  • Revenue from Nokia’s Mobile Networks division stood at $2.85 billion, a slight growth YoY. The increase in revenue due to faster 5G rollouts in India and Europe was able to offset the decline in North America.

Gross margin was impacted for both operators as the sales mix changed drastically. Adapting to changing demand and expecting a recovery in the North American region, both manufacturing firms are looking forward to an improved gross margin by the end of this year.

Cloud software services

Telecom service providers too have been hit by cloud disruption as network evolution has witnessed operators migrating to the cloud. The two Nordic vendors have been at the forefront in assisting operators in transitioning to cloud-native operations, which helps in future-proofing and improving network performance and efficiency.

  • Ericsson’s revenues from its Cloud and Software Services division stood at $1.39 billion, a marginal increase over the previous year. The sales, for a change, were driven by 5G in the North American region. Ericsson currently leads the global market for5G Standalone Core deploymentswith a majority of operators choosing the Swedish company for their cloud-native 5G SA Core. Ericsson’s managed services, however, took a hit.
  • Nokia registered $806 million in net sales for its Cloud and Network Services division. Unlike its Swedish counterpart, Nokia’s growth came from the Europe and Middle-East and Africa (MEA) regions, while it faced a decline in the North American region. Nokia too has been actively helping operators worldwide to deploy 5G Standalone Core (just behind Ericsson in the number of deployments), which alongside Enterprise Solutions helped boost its revenues in this segment, marginally offset by declines in the Cloud Services and Business Applications.

Ericsson revenues by segment, Q2 2023 vs Q2 2022 - 5G rollouts Nokia revenues by segment, Q2 2023 vs Q2 2022 - 5G rollouts

Ericsson’s enterprise segment, network APIs and IPR licensing

  • Last year, Ericsson acquired Vonage, which contributed revenues of nearly $390 million during the quarter, a 12% increase YoY. The company strongly believes that the enterprise segment will continue to grow as it redefines how the capabilities of 5G networks are utilized and paid for by the customers.
  • Ericsson will also continue to digitize the ecosystem for CSPs by maintaining its investments to build the Global Network Platform (network Application Program Interfaces or APIs). With time, a variety of global network APIs will complement the existing communication APIs like video, voice and SMS to help CSPs better monetize their 5G networks, accelerate 5G network rollout and improve network capex.
  • The company also signed a5GIPR licensing agreement during this quarter to help validate its IPR portfolio strength.

Nokia’s diverse portfolio – Networks infrastructure and enterprise

  • 尽管面临一些短期的挑战和宏观oeconomic uncertainty, which resulted in a YoY revenue decline, Nokia’s Network Infrastructure segment generated $2.15 billion in revenues and continued to gain market share across the globe.
    • The IP networks grew in Europe with increasing sales to enterprise customers.
    • The optical networks unit registered a double-digit growth driven by increasing broadband penetration in India.
    • The fixed networks unit witnessed a decline on the back of slowing FWA deployments in North America.
  • Nokia’s revenue from its enterprise customers grew by almost 30% YoY. The company added 90 new enterprise customers this quarter. Its private wireless business reached more than 635 customers.
  • Nokia also signed a long-term patent license agreement with Apple. Multi-year revenue recognition might start in January 2024.
  • Nokia also struck an important deal with Red Hat this quarter, where the latter will serve as the primary reference platform to develop, test and deliver core network applications in an attempt to rebalance Nokia’s portfolio.

Analyst outlook

网络设备厂商和软件提供商re looking to transform obstacles into opportunities. Both Ericsson and Nokia are expecting their business performance to improve towards Q4 2023 and to continue improving in the coming years. Inventory correction by operators has been the prime reason for the revenue decline this quarter. But network sales have been able to weather the slowdown as operators need to increase the capacity of their networks.

Counterpoint Research believes that 5G investment has not yet peaked. Over the next few years, the industry will witness the advent of5G Advancedstarting with 3GPP Release 18, operators transitioning to 5G SA, an increase in the number of monetizable 5G use cases,FWA going global, and increased 5G investments in mid-band andmmWavebands. The entire mobile industry is bullish about private networks, which present a significant opportunity for operators and vendors alike. Amid the growing geopolitical turbulence, with the West hardening its stand on the “rip and replace” of Chinese networking equipment, Nokia and Ericsson might even see other markets opening up for them. Reducing internal costs and streamlining internal operations remains a challenge for both suppliers. The two should benefit from growing confidence in the enterprise segment. Nokia expects to leverage its leadership in the network infrastructure business and attain market leadership in the fixed-broadband space with its wide variety of ONTs, OLTs and FWA CPEs.

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AI Needs to Reside in the Vehicle to Work Well

Mercedes is running a beta program where those that opt in will be able to accessChatGPTfrom their vehicle by interacting with thevoice assistantalready present in MBUX-equipped vehicles. But rather than the cloud-based service that Mercedes is going with today, it should be looking at implementing ChatGPT directly in the vehicle.

  • Mercedes owners in theUS可以登记程序接受一个更新吗for their car.
  • The test is due to run for three months and is being supported by Microsoft’s Azure OpenAI Service, which is an API to which clients can connect their services to havegenerative AIfunctionality.
  • Mercedes is able to implement this service very easily because all it is really doing is providing a prompt for the vehicle assistant to fill in, send it to the cloud and then read out the results.
  • This means that all of the inference or processing of the request will be done in the cloud with the voice assistant doing nothing more than acting as a front end to provide the voice functionality.
  • The vehicle is a use case where generative AI could have a disproportionately large impact. This is because a touch-based icon grid is a substandard user experience no matter who provides it.
  • The problem that the car makers have is that their icon grid is much worse than Apple, Gooxgle orTesla.
  • Furthermore, in 2016 and 2017 we concluded that voice was the leading contender to improve the digital experience in the vehicle but that voice was not good enough to create an acceptable user experience.
  • This is why vehicles are still limping along with smartphones embedded in the dashboard.
  • We have also concluded that generative AI represents a significant step forward in the ability of machines to communicate with humans and provide a user interface for a digital service.
  • Consequently, generative AI offers a significant opportunity for vehicle makers to win back the digital initiative that they have ceded to the digital ecosystems.
  • This is extremely important as vehicle makers’ ability to monetize the market for in-vehicle digital service will be contingent on their ability to remain relevant in the digital vehicle experience.
  • This is why Apple andGoogleare coming aggressively after the vehicle and so far, the OEMs have mounted feeble resistance or offered complete capitulation.
  • The problem with this approach is that the only way to implement generative AI effectively in the vehicle is to put it directly in the vehicle.
  • This is because reliability and speed are critical, and in this example when the network goes, the service goes with it.
  • Furthermore, it is unlikely that there will be any real integration with the vehicle, meaning that telling ChatGPT that one is feeling hot is likely to result in silence rather than the air-conditioner being turned up.
  • Using ChatGPT as the benchmark implementation in the vehicle will have a profound impact on the cost of the vehicle’s electronics as well as its power consumption which in anEVis a deal breaker.
  • There are rapid developments going on in the open-source community that may make this a lot easier to achieve, but implementing large language models outside of the data center remains a work in progress.
  • Despite the current limitations, the potential for generative AI to help OEMs to overcome their digital shortcomings is substantial and represents one of the best opportunities the OEMs have had for a long time.
  • The risk is that if no one uses it as a result of the way the Mercedes experiment is implemented, it will lead to the (wrong) conclusion that putting it in the vehicle is a waste of time.
  • This would lead to the squandering of another opportunity, resulting in digital irrelevance and greater commoditization.
  • We remain pretty pessimistic about the outlook for the OEMs.

(This is a version of a blog that first appeared on Radio Free Mobile. All views expressed are Richard’s own.)

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AI & API Accelerating Digital Transformation Across Verticals

  • The hype surrounding digital twins is undoubtedly real, with many IoT players actively seeking to leverage the unique benefits of digital twin technology to gain a competitive edge in the market.
  • Connectivity, a key component of digital transformation, was at center stage with a significant focus on satellite and 5G.
  • Partnerships, collaborations, and API will fight the fragmentation in IoT and digital transformation.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – May 15, 2023

Counterpoint Research analysts recently attended three of the most prominent tech events of 2023 – Consumer Electronics Show,MobileWorld Congress, and Industrial Transformation at Hannover Messe. After a hiatus of three years, these events saw a remarkable return of in-person attendance, indicating a promising comeback of the tech industry. During their visits, Counterpoint analysts delved deep into the latest trends and advancements in IoT and digital transformation, and have now identified seven key takeaways or focus areas. The findings are expected to have far-reaching implications for businesses and organizations looking to stay ahead in the rapidly evolving tech landscape.

Commenting on the key takeaways,Associate DirectorMohit Agrawalsaid, “As we attended the tech events of 2023, it became increasingly clear that the rise of digital twins was the single biggest takeaway, particularly in Hannover. We saw how digital twins have energized the industrialIoTplayers, and are likely to become a critical component of digital transformation in the coming years. Connectivity plays a crucial role in enabling digital transformation and the events had a significant focus on satellite, private networks, eSIM,5G, and connectivity management platforms. Finally, we were impressed with the companies’ incorporation of AI in various processes, especially in analytics, visual inspection, and robotics. It is exciting to see how these technological advancements will shape the future of industries, and we are eager to keep a close watch on these developments.”

Key Take aways from tech events
Source: Counterpoint Research

Each of the events was attended by over 100,000 visitors and had exhibitors across the long value chain of IoT and digital transformation. Many of the takeaways amplified Counterpoint Research’stop trends prediction for 2023released earlier this year, notedResearchVice PresidentNeil Shah. “IoT is an incredibly vast and fragmented value chain, and it is becoming increasingly clear that industry consolidation is necessary. Efforts like theQualcomm Aware platformare a step in the right direction to reduce fragmentation and improve the overall IoT landscape. It is essential to see more of these kinds of partnerships between players in the industry to reduce adoption friction points and fully realize the potential of IoT. APIs are increasingly becoming important in seamless collaborations. As we move forward, we remain optimistic about the future of IoT and the role that industry collaboration will play in driving innovation and growth,” Shah added.

The comprehensive and in-depth ‘IoT and Digital Transformation Trends from CES, MWC and Hannover Mess’ report is now available for purchase at report.www.arena-ruc.com.

Feel free to reach us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the technology, media and telecom (TMT) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Mohit Agrawal

Neil Shah

Counterpoint Research

press@www.arena-ruc.com

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